Travel and Tourism industry never stops working. It is one of the industries that keep growing every single day. For many travelers and vacationers, the question of where to stay while spending less amount of money is always the priority. In such a case, Airbnb has earned a name and trust among people around the world. Since after its launch, the Airbnb app has become the most convenient way for people to save money on trips, meet hospitable people, and live like a local.
Do you think Airbnb's success did happen overnight? No, it didn’t. But, it has become an inspiration for many startups to enter the same industry with the same business model. Do you want to replicate the success of Airbnb? Keep reading this article to find out how to build a website like Airbnb. We will also include details on how to make money with a vacation rental marketplace.
What is Airbnb?
Airbnb is an online peer-to-peer marketplace offering arrangements for lodging, primarily homestays, or tourism experiences. The company Airbnb Inc. is based in San Francisco, California, USA. The company does not own any property or listing itself but works as a broker between the travelers and hosts to earn commission on each booking.
The Background of Airbnb
The story of Airbnb started back in 2008 when two web and app designers (Brian Chesky and his partner Joe Gebbia) rented their shared space to three travelers to pay their rent. In those days, Brian and Joe couldn’t afford to pay their rent, so they transformed their living room into bed and breakfast with a lovely homemade breakfast for three tourists. Soon they realize the potential in this business and start looking for investors to fund their idea.
By 2009, after meeting users in New York, the two founders returned to Sans Francisco with 10,000 users and 2,500 listings. At the 2011 South by Southwest conference, Airbnb won the "app" award, which boosts the popularity to its peak.
Today, Airbnb is one of the biggest accommodation-letting services with millions of hosts and travelers using it daily.
How does Airbnb Work?
The purpose of Airbnb is the same as any other accommodation-letting site, and that is to book a place to stay. But the major difference between Airbnb and any other hotel booking site is that most sites list hotels and motels for stay, but Airbnb connects people with people. It means that people who are looking to stay in local houses and people who want to let their private living space can both come together to connect via Airbnb.
There are three main categories of people on Airbnb.
- Hosts – These people list their private living spaces to let for travelers and tourists
- Guests – These people search for accommodation to book their stay at affordable prices and in local houses
- Admins – These people ensure that all interactions between guests and hosts go smoothly
Here’s how the process of Airbnb works:
Step # 1: A host sign up on Airbnb and list the space for accommodation
Step # 2: A guest comes to the platform and searches for specific space to stay
Step # 3: Admins inform hosts about the booking
Step # 4: Traveler pay the rental fee to Airbnb which is after the deduction of commission credited to the hosting account
Step # 5: Guests check-in and check out after their stay
Step # 6: Guests rate and review their stay at the host place, which helps other visitors of Airbnb select the hosts
Reasons Why People Prefer Airbnb over Hotel Booking Sites
Technology has changed everything, and similarly, it has changed the dynamics of travel and tourism. Primarily people used to book hotels and motels to stay. Still, since the popularity of platforms such as Airbnb hit the market, now travelers prefer to stay at local houses and Bed & Breakfast to save money and enjoy the real spirit of the place.
Although many people have different reasons to choose Airbnb over a hotel stay, some basic reasons are as follow:
Enjoy Local Experience
Many people prefer Airbnb to enjoy the real spirit of the place. By staying at a local house, you will get to know the places locals do, dine at places where locals do, and see the places locals prefer, and you can talk and have fun with a local.
It’s Cheaper than a 3-Stars Hotel
Airbnb is way cheaper than a 3-star hotel. You can easily find a good place for $5 to $7 in countries like Thailand, Malaysia, and Indonesia. You can find a good deal of up to $35 per night in other countries like the USA, the UK, and Europe. Not only can you book a room space, but you can also find a couch space, bed space, or sharing room if you don’t have too much money to spend on accommodation.
Airbnb Luxury Deluxe Accommodation
Don’t think that Airbnb is only for budget travelers. You can also find a luxury listing of rooms, guest houses, and even flats in many regions of the world. These are way cheaper compared to a suite in a 5-star hotel. So, not only saving money is what you get but luxury too.
Unlike hotels where the service staff often visit the room to clean, in an Airbnb, you have total privacy as most of the time; you are doing your cleaning. If you need some peace, when you need to spend some 'ME' time, turn to Airbnb.
Admins verify all the hosts’ listings before showcasing it to the guests. Hosts can also prove their identity by verifying their email address, phone number, driver’s license, and even social media accounts.
Secure Payment Platform
You don’t need to worry about random people having your personal information, as all payments go through the Airbnb system. Also, the host is not paid until 24 hours after your arrival.
Kitchen for Cooking
Most people prefer to cook their food and try to avoid the restaurant's food. Airbnb provides you the opportunity to bring your kitchen with you. You can buy the grocery from any store and cook your food in the kitchen.
Customer Reviews and 24/7 Support
People prefer Airbnb because they get genuine reviews of users, and based on those reviews, they got to choose the right place for themselves. Apart from this, Airbnb offers 24/7 live chat support to make your stay as comfortable as possible. If you have any issues related to the host, you can contact them any time.
Why should you consider opening a Startup like Airbnb?
According to Statista, the Global Online Travel Booking Companies generated approximately 15.07 billion U.S. dollars in revenue in 2019, up from 14.53 billion the previous year. From 2007 till 2019, the traveling industry showed a constant growth. The ability to book apartments, rooms, flights, and many other services online has made travel planning much more straightforward than the last few years.
Many other similar businesses have opened and flourished during the last decade. For investors opening a website like Airbnb is a lucrative opportunity.
Now let’s talk about how to make an online marketplace like Airbnb. Let’s define the essential functions of a website like Airbnb.
What are the core features for travel website like Airbnb?
Easy-to-use Sign-in/Sign-up Process
The process of signing-in and signing-up should be simple and easy for everyone. Even a non-tech savvy person can do it right in no time.
Authorization of both the guests and the hosts is very important for a platform like Airbnb. At the very initial stage of signing up for the platform, the travels and hosts should provide information like full name, email ID, and later the email ID should be verified by sending a verification email. A social media login feature is practically required for a website like Airbnb since users prefer to use quick login via their Google or Facebook accounts instead of filling out long signup forms.
Personal Information or User Profile
Upon signing up, the platform should ask both the hosts and the guests to create a profile under the host and guest's category and provide valid information. The host should briefly explain the goods and bads of his/her place. Guests should quickly list down the specific requirements for his/her stay.
Listing of Accommodation
This feature will help the hosts to manage their listings. With searching and sorting, hosts can update information across multiple listings at once.
By adding search filters, the platform will help guests search their required locations by selecting location, budget, and other requirements.
Adding maps and pinning the locations listed by hosts on the map will help travelers better understand the location. It will also help them to reach the destination upon arrival to the visiting country.
Upon listing the space, a host should provide a detailed description of their space along with multiple images to let the guests see the space from different angles with all details.
Ratings, Reviews, and Comments
After checking out from the accommodation, a guest should be able to rate their experience and review the host. These reviews and comments will help other guests to decide whether they should or shouldn’t book the same host or accommodation.
Features like live chat, messaging service to connect host and guest before finalizing the booking, secure payment options, push notifications, and community support are very important. If you want to compete in this market, you should consider mastering these features.
To run a business like Airbnb, one should understand the business model and how Airbnb makes money. So, let’s have some discussion on it.
How does Airbnb Earns Profit – The Business Model
Before heading towards Airbnb's business model, let’s have a quick overview of the founder, funding and facts.
- Founders: Joe Gebbia, Brian Chesky, and Nathan Blecharczyk
- Airbnb valuation: $31 billion
- Funding received: $4.4 billion
- Headquarters: San Francisco, California, United States
- Nations: 190+
- Individuals staying regularly: 1,40,000+
- Served: 35 million visitors
The Business Model
Airbnb has an aggregator business model, just like Uber, Amazon, and eBay. All these platforms are created and designed to cater to the need for mass markets with a bridge between providers and consumers. Airbnb works like a broker between the hosts and the guests and earns commission on each booking. The entire profitability of Airbnb depends on its listings.
By mid-2017, Airbnb had 4 million listings worldwide, spread throughout 191 countries. At this point, Airbnb has more listings than the “top five major hotel brands combined.” Airbnb doesn’t own a single property in the listing.
The only components on which the entire business model is based are the Airbnb web and app. Via its rating system and ability to tailor experiences, Airbnb has created communities of fans for all of its customer segments.
Another module of the Airbnb business model is an advertisement. A good chunk of profitability of Airbnb comes from advertising on the web and app.
Airbnb also has a team of professional photographers who take high definition pictures of the properties, which lets the travelers choose from the real looking places and make the right choice. Airbnb charges the fees from hosts.
In a business like this, there are many apps like Booking.com where you can generate revenue. I think there are three main predominant systems on how to get money:
1. Advertising business (i.e., TripAdvisor)
In this model, all money is based on advertisements that are displayed on the page. So money will earn on each click of the visitors (cost-per-click). Advertisers pay a fee to the company like (Tripadvisor) when a user clicks on a link and directs to the advertiser’s page.
2. Merchant business (i.e., Expedia)
In this model, the application works as a merchant and booking at the same time. Often a company buys hotels/apartments and rents them on their page.
3. Agency business (i.e., Booking.com)
In this model, the application works as an intermediary between travelers and room owners. The company takes a fee (10% - 30%) from all transactions.
Things you should consider before Entering the Business
When you are thinking of starting a business the same as “Airbnb”, you should consider some important factors that matter. Here’re some of the basic factors you should consider:
The current travel market is ruled by big names such as Airbnb, TripAdvisor, and Booking.com. It would be better to select your niche as per your expertise. The next thing is knowing your customers, which can help you and your idea win competition, but you need to find a good marketing strategy.
Your idea could be interesting and exactly what users need, but you need to remember in the back of your mind, one sentence:
“Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” - Steve Jobs
Believe In Your Luck
The second problem (someone could say opportunity) is finding a way to increase the number of satisfied travelers. Most users want to use a system with many reviewers and comments.
But what about the startups? The best idea is to give some premium access for the first X number of weeks/months with extra benefits. Or, if you have money, give a discount or cash rewards for exclusive users and finally offer lower rates for members of loyalty programs. You need to lure the customers into using your services, and rest is your LUCK.
Know the Reasons for Failure of Startups
Statistics say that the majority of the startups fail within just 20 months of starting the operations. There are a lot of issues to consider, and each project is different, but for sure, we can highlight basic problems such as:
- Choosing a market that doesn’t need an idea like this - obvious, right?
- Lack of finance or investment or improper cash flow
- Not hiring the right team or useless marketing and advertising
- Improper execution of the idea
- Unfair pricing policy or charging more than the market for similar products or services
How to Start a Successful Travel Website?
Before getting involved in the steps to create a travel website, it is important for the investor to critically analyze important factors like competition, demand, and supply, features, and required amount of funds. Knowing the factor is very important to sustain your business, or else you would fail to sustain your newly started business.
Analyzing competitors is important so you can get complete knowledge of the features they are offering in the market.
The following are the steps to start a successful travel website like Airbnb and Booking.com.
Step # 1: Validate Your Business Idea
The first step in starting an online travel business is to validate your idea. You need to evaluate your idea not only for knowing the amount of investment and building a feasibility plan but also for the development team who will give life to your idea by developing the website and app. Startup owners should have a clear vision and detailed outline of their idea to explain the business model to the development team.
Moreover, the owner and the development team should have to be on the same page and the same understanding of what kind of problem they’re solving for end users. Such close collaboration is the cornerstone of a project’s success.
Step # 2: Choose Software Option
Airbnb's entire business is based on its application. So, if you are thinking of entering the same business, you should wisely select the best software option to help your potential clients.
You have two choices:
- Customer Software
- Ready-Made Software
The best thing about custom software is innovation. You can add options and features that no one else is offering. You can make changes as per your need. I want to implement special business logic and give maximum value to the customers; this is the best option.
However, the custom software takes a lot of time in designing and development. You will also need to pay extra money compared to ready-made software.
The good thing about ready-made software is steady and low-cost development. The software is already designed and developed. You just need to install or configure to start using it. You will either pay the subscription fees or license fees for a ready-made software, which is very low compared to designing custom software.
The bad thing about this option is the lack of creativity. You will be offering the same features and options as anyone with the same ready-made software. You won’t be able to add your own creativity or customization to the app.
Easy-to-Use and Friendly UI/UX
Before selecting the UI/UX of your web and apps, you better understand your target audience's dynamics. Are you running an online travel business from an advanced and properly developed country? Or, your target audience is low-class, underdeveloped countries? The use of technology and the availability of IT infrastructure is very important. People in villages might not come to your site and list their houses for accommodation. Similarly, people visiting from the underdeveloped country might not know French or German, if visiting these countries for holidays.
Having complete knowledge of your target audience will help you design a user-friendly UI/UX. You can add features like availability of languages, support for all OS, and much more.
You need to select the technology to develop your web and app when you underline the requirements you need for your UI/UX. In this step, you will select the technology that suits your expectations of the design and usability of the application. All this information will help create a web and app that you will be proud of and give a boost at the start.
Here’s a list of technology most recommended to develop a business like Airbnb:
- Application Framework — Ruby on Rails
- Automation Frameworks — RSpec, Capybara
- SQL data storage — PostgreSQL
- Data storage — Redis
- Web server — Nginx
- Web application server — Puma
- Hosting — Amazon Web Services (AWS)
Here your idea will start to go under execution by moving your idea into code! The development team will start creating the design, code on the front side, and the backside. If you hire a development agency from outside, you need to be in close collaboration with them at every step.
The back-end developer will talk with you about the architecture of the page. About features, necessary fields for reservation. They will try to write down all the details and create models/graphs/algorithms of how everything should work. This is the core of functionality, so they need to know really everything about this idea! When everything is correct with your expectations, they will start coding. So they prepare visible functionality for the user. The really important things during this process are server validations, routes between pages, fields, security, tests for these, and many others. They will inform you up to date what they are doing and what is for.
While the backend is in progress (or even done) and design is ready, the development team of front-ends will move the design into code. They will work connected with the graphic design team, so you don’t need to worry about the correct flow. The development team members could chat with you if they have some misunderstanding about things or propose to you other (sometimes better) ideas. All codes will be tested in the newest / most used browsers so users could use what they want. Of course, while working with features, they will create tests for it to decrease bug situations.
When an application is made, it will be pushed to some hosting (i.e., AWS, Heroku), and you can test it before launching it officially in the market. Of course, the job of the development team or agency is not done because there is a possibility of improvements and changes in the web and the app - “The Sky's the Limit.”
Starting a business like Airbnb requires a lot of concern. The market is saturated with tough competition. But, new startups enter the market every day, and some of them succeed. The cost of building a business model similar to Airbnb depends on a lot of factors. It might require moderate investment to a good amount of funds.
There are three models of how you can earn money: advertising, merchant, and agency so you can combine them. Starting your “new Airbnb” page, you need to decide which business model you want to adopt. This choice will help you with the development and estimation of funds. It will also give you some spectrum knowledge of what you propose and how to start your business.
Ending Note: Selleo can create for you fully working, great application from scratch. We have teams of expert front-end, back-end, and UX/UIQA, developers. Our QA team stands out of all our competitors because of their expertise.
If you need consultation for your idea, please contact us for more information.